Inflation reaches 10.1% in September

Rising food prices have driven UK inflation to 10.1% in September, figures from the Office for National Statistics have shown today.

Marking the second time this year that inflation has reached double digits, the figure slightly outstrips the 10% predicted by economists.

Based on the consumer price index, the 10.1% figure has been driven by rising food prices and is an increase on the 9.9% annual increase seen in August.

Lewis Shaw, founder & mortgage expert at Shaw Financial Services, said:

"Inflation running at double figures is the one thing the Bank of England didn’t want to happen. This means more pain coming down the line. Market expectations are for the base rate to hit 5% by May next year. If that happens, we could see mortgages even higher than now"

"While fixed rates don’t correlate with bank rate, they tend not to be a million miles out. For savers, hopefully they’ll start to see some return for the first time in over a decade, however, the evil that is high inflation will still mean they’re losing purchasing power in real terms. We really need strong monetary policy to tame the inflationary beast, because it makes everyone poorer."

Nigel Green of deVere Group said:

"The scale and scope of Britain’s cost of living crisis have been revealed in painful terms again today as inflation, driven by soaring food prices and the energy crisis, hits double digits once more.

“The figures will cause yet more stress and worry to households and businesses across the country.

“The 10.1% inflation rate will help decide how dramatically the Bank of England raises interest rates next month.

“We now expect the Bank to hike the rate by a full percentage point."

“A rate rise would mean higher borrowing costs for property owners on variable rate mortgages. Lenders will also increase the rates they charge on personal and business loans at a time when families and firms are facing a shocking cost of living crisis.”

Richard Pike, chief sales and marketing officer at Phoebus Software, says:

“The rise in inflation announced this morning, albeit small, reflects the continuing rise in energy prices and basics in the supermarket. Given that the war in Ukraine continues to rumble on, we are to an extent being held to ransom and rising prices are as such inevitable.

“The next meeting of the MPC on the 3rd will no doubt end in another increase in interest rates. The question is how high can the Bank of England go? Mortgage rates are at the highest many have ever seen, which has to affect the first-time buyer market more than any other.

“Historically, benefit levels have been driven using the figures in September, it will be interesting to see if this policy is used when benefits are set for next April. Given the recent fiscal U-turns, the current level of borrowing and the ‘return to austerity’ it is questionable that benefits will be tied rigidly to the current rate of inflation. It is most definitely a fine line that the new Chancellor will be walking in the coming months.”